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Meeting Summaries and Observer Notes

 IFRIC September 2008


The IFRIC completed its redeliberation of draft Interpretation D23 at this meeting.

The IFRIC approved the staff�s proposed drafting changes to D23 developed in response to its redeliberations at the meeting in July 2008 as well as those changes proposed in response to the minor issues discussed in this meeting. The main changes relate to:

  • clarifying the scope of the Interpretation with respect to common control transactions
  • specifying the measurement of the dividend payable without attributing the requirement to a particular standard and therefore also modifying the disclosure requirements
  • providing additional rationale for the conclusion that the settlement gain should be included in profit or loss
  • adding guidance on when to recognise the dividend payable
  • adding the proposed amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

The IFRIC recognised respondents� concerns about the potential �accounting mismatch� in equity resulting from measuring the assets to be distributed at their carrying amount and measuring the dividend payable at the fair value of the assets to be distributed. Consequently, the IFRIC considered whether it should recommend that the Board amend IFRS 5 to require the assets to be distributed to be measured at fair value.

The IFRIC did not identify any IFRS literature that would support an upward remeasurement of the assets solely on the basis of a commitment to distribute them. The IFRIC noted that such a change would result in an inconsistency within IFRS 5 between assets held for sale and those held for distribution. The IFRIC also noted this �mismatch� would arise only in the normally short period between when the dividend payable is recognised and when it is settled. Therefore, the IFRIC decided not to recommend that the Board amend IFRS 5 in this regard.

The IFRIC considered whether the changes from the draft Interpretation exposed for comment as D23 were such that re-exposure was needed in accordance with the IFRIC Due Process Handbook. The IFRIC concluded they were not.

Finally, the IFRIC voted and confirmed the consensus. Subject to drafting changes to be confirmed by circulation of a revised draft, the IFRIC directed the staff to present the final Interpretation to the Board for approval. The staff expect the final Interpretation to become effective for distributions recognised in annual periods beginning on or after three months after it is issued.

Date: 9/4/2008